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MEMORANDUM 

Subject: Final Statutory Factors Assessment for 2016-2017 Biomass Based Diesel (BBD)

Applicable Volumes 

From: U.S. EPA, Office of Transportation and Air Quality 

To: EPA Air Docket EPA-HQ-OAR-2015-0111 

 In this memorandum we discuss our considerations of the statutory factors set forth in 

CAA section 211(o)(2)(B)(ii)(I)-(VI). As discussed in Section III.D.1 of the preamble, the BBD 

volume requirement is nested within the advanced biofuel requirement and the advanced biofuel 

requirement is, in turn, nested within the total renewable fuel volume requirements. This means 

that any BBD produced beyond the mandated BBD volume can be used to satisfy both these 

other applicable volume requirements. The result is that in considering the statutory factors we 

must consider the potential impacts of increasing BBD in comparison to other advanced 

biofuels1

. For a given advanced biofuel standard, greater or lesser applicable volumes of BBD do 

not change the amount of advanced biofuel used to displace petroleum fuels; rather, increasing 

the BBD applicable volume may result in the displacement of other types of advanced biofuels 

that could have been used to meet the advanced biofuels volume requirement.

Assessment of Statutory Factors for 2014 and 2015 Biomass-Based Diesel Applicable Volumes

Given the fact that the 2014 compliance year has passed, and that the final rule 

establishing the 2015 standards will be too late to influence the market in 2015, whatever action 

we take with respect to setting the applicable volume of BBD for these years will not change the 

amount of qualifying BBD produced, imported and used. Furthermore, in light of our decision 

to set the advanced biofuel applicable volumes for 2014 and 2015 at the level that was actually 

produced and used, and which is available for compliance, all of the BBD RINs generated in 

these years are expected to be retired for compliance with the 2014 and 2015 advanced biofuel 

requirements (or rolled over to replenish an equivalent number of prior-year carryover RINs). 

As a result, we believe that our action in setting the 2014 and 2015 BBD volume requirements

will result in no real-world impacts, including no impacts with respect to the factors listed under 

CAA section 211(o)(2)(B)(ii)(I)-(VI). For example, there is no longer any ability for other 

advanced biofuels to compete with BBD for a greater share of the advanced biofuel pool in 

2014, so there would be no marginal benefit in terms of incentivizing production of such fuels in 

setting a higher or lower volume requirement than the volume of BBD than was actually 

produced and imported and available for compliance in 2014. The same is true for 2015, since 

this rule cannot influence the market in the one remaining month of the year. In light of these 

 1 As long as the BBD applicable volume is lower than the advanced biofuel applicable volume our action in setting 

the BBD applicable volume is not expected to displace conventional biofuels under the total renewable standard, but 

rather other advanced biofuels. See Table II.G-2, “Volume Scenarios Illustrating Possible Compliance with 3.61 

Bill Gal Advanced Biofuel and 18.11 Bill Gal Bill Gal Total Renewable Fuel”
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considerations, and other considerations discussed in the preamble, we are finalizing the 2014 

applicable volume for BBD as equal to the volume actually produced and imported, which is 

available for compliance. Similarly, for 2015 we are setting the biomass-based diesel standard at 

the level of BBD that we project will actually be produced and imported and available for 

compliance in 2015.

Primary Statutory Factors Assessment for 2016 and 2017 Biomass-Based Diesel Applicable 

Volumes

EPA’s primary assessment of the statutory factors for year 2016 is that because the final 

advanced biofuel volume requirements for 2016 reflects the advanced biofuel volumes

(including BBD) that can reasonably be attained, and because the BBD requirement is nested 

within the advanced biofuel volume requirement, we expect that the advanced biofuel volume 

requirement will determine the level of BBD production and import; the same volume of BBD 

will likely be produced and imported regardless of the BBD volume that we require for 2016

with only marginal and uncertain differences as BBD competes with other advanced biofuels in 

meeting the advanced biofuel volume. 

This assessment is based, in part, on our review of the RFS program implementation to 

date, as discussed in Sections III.B and III.D of the final rule preamble. Since our decision on 

the BBD applicable volume requirement for 2016 is not expected to impact the volume of BBD 

produced and imported during this time period, we do not expect our decision to result in a 

difference in any of the factors we are required to evaluate pursuant to CAA section 

211(o)(2)(B)(ii)(I)-(VI). However, although the BBD volume requirement is lower than the total 

volume expected due to the higher advanced biofuel standard, the BBD standard can still have a 

positive impact on the future development and marketing of BBD by providing a base 

guaranteed level for investment certainty in meeting that advanced volume. This is consistent 

with the objectives of the Act to support the continued growth in production and use of 

renewable fuels. 

Similarly for 2017, even though we are finalizing only the 2017 BBD requirement at this 

time and not the 2017 advanced biofuel requirement, we believe this same primary assessment is 

appropriate since, as in previous years, we anticipate that the 2017 advanced biofuel requirement 

will be set to reflect reasonably attainable volumes in the use of all advanced biofuels and that 

the advanced biofuel volume standard will be expected to drive BBD production and use. 

Supplementary Statutory Factors Assessment for 2016 and 2017 Biomass-Based Diesel 

Applicable Volumes

As an additional supplementary assessment, we have considered the potential impacts of 

modifying the applicable volume of BBD from the levels of 1.90 billion gallons in 2016 and 2.00

billion gallons in 2017, based on the assumption that in guaranteeing BBD volumes at any given 

level there could be greater use of BBD and a corresponding decrease in the use of other types of 
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advanced biofuels for years 2016-2017.2, 3 Setting a higher or lower BBD volume requirement 

than 1.90 and 2.00 BG for 2016 and 2017, respectively, would only be expected to impact BBD 

volumes on the margin, protecting to varying degrees this advanced biofuel from being 

outcompeted by other advanced biofuels. At present, the other advanced biofuels that could be 

affected include the following: sugarcane ethanol; ethanol from grain sorghum, food waste, or 

cover crops; renewable diesel from food waste or cover crops; renewable naphtha from food 

waste or cover crops; CNG/LNG from non-cellulosic sources; renewable diesel co-processes 

with petroleum diesel fuel; and cellulosic biofuel. EPA continues to publish analysis of 

greenhouse gas emissions attributable to the production and transport of feedstocks used to 

produce cellulosic and advanced biofuel, including recent analysis of biomass sorghum, 

pennycress oil, carinata oil, cottonseed oil, and jatropha oil,. These analyses could help 

influence the submission of new petitions seeking EPA approval of additional advanced and 

cellulosic biofuel pathways.

We think it is theoretically possible but unlikely that our decision regarding a BBD 

applicable volume will have any impact on the production or import of cellulosic biofuels given 

our separate action in establishing a cellulosic biofuel standard that is nested within the advanced 

biofuel standard. Accordingly, the more likely affected biofuels are non-cellulosic advanced 

biofuels, and our assessment below discusses the possibility that our decision regarding the BBD 

applicable volumes for 2016-2017 could impact the production and use of these non-cellulosic 

advanced biofuels. 

Our supplementary assessment of the statutory factors for this final rule is described 

below. Overall, we have determined that the primary assessment and the supplemental 

assessment of the statutory factors specified in CAA section 211(o)(2)(B)(ii)(I)-(VI) for the 

years 2016-2017, do not provide significant support for setting the BBD standards at levels 

higher or lower than 1.90 billion gallons in 2016, and 2.0 billion gallons in 2017. 

The EPA received numerous comments pertaining to the consideration of the statutory 

factors. NBB stated that we improperly based our consideration of the statutory factors on a 

comparison of BBD to other advanced biofuels, rather than to diesel fuel. They asserted that 

BBD would not compete with other advanced biofuels because EPA proposed to set the 

advanced biofuel volume at maximally achievable levels, and that no competition would be 

present if all available advanced biofuels had to be used. They suggested that setting the BBD 

 2 For the NPRM we performed a similar assessment for lower BBD and advanced biofuel volumes. 3 Section 211(o)((2)(B)(i)(IV) of the Clean Air Act provides the statutory applicable BBD volumes for years 2009 –

2012. For years after 2012, section 211(o)(2)(B)(v) specifies that the applicable volume for BBD cannot be less 

than the requirement for 2012 which was 1.0 billion, and section 211(o)(2)(B) (ii) requires that EPA determine the 

annual BBD requirement taking into consideration a review of the implementation of the program and an analysis of 

various factors, in coordination with USDA and DOE. In setting this annual BBD volume, the statute does not 

establish any numeric criteria or other means of weighing the importance of the often competing factors, or how to 

balance the overarching RFS program goals. In the analysis presented in this memorandum, we have considered 

whether any of the other factors listed in the statute should lead us to adopt higher or lower BBD volume

requirements. The volumes could be set as low as the statutory minimum 1.0 billion gallons or, for 2016, as high as 

the advanced volume requirement minus the cellulosic biofuel requirement.
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standard at a higher level than proposed would actually result in BBD competing against diesel 

fuel, and therefore, EPA should analyze the impacts of displacing diesel fuel with BBD. 

. In response we note that in the final rule we are using the cellulosic waiver authority to 

reduce the advanced biofuel statutory volume, and we are establishing the required 2016 

advanced biofuel volume at a level that corresponds to our assessment of volumes that are 

reasonably attainable. We have not sought in the final rule to set the advanced biofuel 

requirement at a level that reflects “maximum reasonably achievable” volumes, as we have in 

using the general waiver authority for the total renewable fuel standard, Although the 

terminology is similar, the result is that our approach in setting the advanced biofuel requirement 

is less exacting in attempting to capture volumes that may be available than our approach to 

identifying the final increment of volume reduction for total renewable fuels, and it is entirely 

possible that there could be competition between BBD in excess of the BBD standard and other 

advanced biofuels in satisfying the 2016 advanced biofuel requirement. 

In light of the nested nature of the BBD standard within the advanced biofuel standard, it 

is apparent that excess BBD above the BBD volume requirement will compete with other 

advanced biofuels for use in the RFS program as advanced biofuel, rather than compete directly 

with diesel. The only way for EPA’s action on the BBD volume requirement to result in a direct 

displacement of petroleum-based fuels, rather than other advanced biofuels, would be if the BBD 

volume requirement were set larger than the total renewable fuel requirement. However, since 

BBD is a type of advanced biofuel, and advanced biofuel is a type of renewable fuel, the BBD 

volume requirement could never be larger than the advanced requirement, and the advanced 

biofuel requirement could never be larger than the total renewable fuel requirement. Thus, EPA 

continues to believe that it is appropriate to evaluate the impact of its action in setting the BBD 

volume requirements by evaluating the impact of using BBD as compared to other advanced 

biofuels.

NBB also asserted that our analysis of the desirability of setting the BBD volume 

requirement in a manner that would promote the development and use of a diverse array of 

advanced biofuels is prohibited by statute. We disagree with these comments. Congress broadly 

defined the term “advanced biofuel” in a way that allows an array of fuels to satisfy the 

definition and participate in the RFS program as advanced biofuels. Congress specifically chose 

to mandate only a minimum 1 billion gallon volume requirement for BBD in 2013 and later 

years, while the statutory tables indicate substantial growth in both cellulosic biofuel and 

unspecified advanced biofuel for these years. While it is appropriate for EPA to consider 

enlarging the minimum volume devoted under the statute to BBD, as we are doing in this 

rulemaking, it is clear from the statute that cellulosic biofuel and advanced biofuel were not the 

only advanced biofuel types envisioned by the statute. Furthermore, as discussed elsewhere in 

this memorandum and in the preamble, there are potential benefits to diversifying the renewable 

fuel supply, including energy security benefits and potential benefits associated with 

incentivizing continued research and growth of advanced biofuels that may have superior GHG 

and non-GHG environmental attributes than the current options. Thus, we disagree with the 
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comment that EPA is prohibited from setting the BBD applicable volume with the intention of 

promoting growth in non-BBD advanced biofuels, as well as BBD and cellulosic. 

Because the BBD standard is nested within the advanced biofuel and total renewable fuel 

standards, when an obligated party retires a BBD RIN (D4) to satisfy their obligation, this RIN 

also counts towards meeting their advanced biofuel and total renewable fuel obligations. It also 

means that obligated parties may use BBD RINs in excess of their BBD obligations to satisfy 

their advanced biofuel and total renewable fuel obligations. To the extent that obligated parties 

are required to achieve compliance with the overall advanced biofuel standard using higher

volumes of BBD D4 RINs, they may forgo the use of other biofuels considered advanced 

biofuels to meet the advanced biofuel requirement. Therefore, the higher the BBD volume 

standard is, the lower the opportunity for other non-BBD advanced biofuels to compete for 

market share within the context of the advanced biofuel standard. When viewed in a long-term 

perspective, BBD can be seen as competing for research and development dollars with other 

types of advanced biofuels for participation as advanced biofuels in the RFS program. 

Finally, NBB stated that EPA previously found statutory factors supported greater annual 

increases in BBD volume requirement for 2013 and the statutory factors analysis developed to 

justify the 2016 and 2017 BBD volume requirements contradicts the analysis EPA put forward in 

2013. We disagree. As in 2013, we have determined that incremental increases in the 2016 and 

2017 BBD volume requirement are appropriate to provide continued support to the BBD 

industry. We did this in 2013, acknowledging the important role the industry thus far had played 

in providing advanced biofuels to the marketplace, and in furthering the GHG reduction 

objectives of the statute. We did not in 2013, and are not today, setting the BBD volume 

requirement at the maximum potential production volume of BBD. 

Following is a discussion of the six factors listed under CAA section 211(o)(2)(B)(ii)(I)-

(VI) that form our supplementary assessment. 

1. Impact on the Environment 

a. Air Quality 

Based on our emissions and air quality impact analyses from the 2010 RFS2 final rule, 

we can assess the likely impacts on non-GHG pollutants associated with setting the applicable 

volume of BBD at levels higher or lower than 1.90 billion gallons in 2016, and 2.00 billion 

gallons in 2017. 

The 2010 RFS2 analysis estimated the upstream and downstream emission impacts 

associated with various types of renewable fuels, including BBD, ethanol, renewable diesel and 

cellulosic diesel at full implementation of the RFS2 program in 2022. The BBD and advanced 

biofuels volumes assumed in the RFS2 analysis led to increases in some criteria pollutant and air 
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toxics emissions and decreases in others.4 This indicates that some emissions increases or 

decreases might be associated with any change in the volume of BBD and other advanced 

biofuels. Depending on which of the competing advanced biofuels is compared to BBD, the 

emissions impacts of devoting a larger or smaller portion of the advanced biofuel standard to 

BBD will vary (assuming the advanced standard stays constant). However, given that other 

advanced biofuels also result in air quality impacts, and that the volumes at issue are relatively 

small when considered in the context of transportation fuel use throughout the geographic area in 

which the RFS program applies (the continental United States and Hawaii), the overall impacts 

of marginal shifts between BBD and other advanced biofuels is expected to be small, and this 

factor does not appear to provide a good reason for setting a higher or lower nested BBD volume 

requirement. 

While we received comments from biodiesel industry stakeholders touting the non-CO2

air quality-related benefits associated with biodiesel we also received comments criticizing the 

Agency for increasing biodiesel and other renewable fuels that results in negative air quality 

impacts. We continue to believe that the air quality assessment that supports the RFS2 rule, 

which is the result of years of rigorous analysis and modeling, remains the Agency’s best 

estimate of the air quality impacts associated with the renewable fuel standards, including the 

BBD component. Prior studies summarized in the RFS2 RIA indicate that the impacts of 

biodiesel on VOC, PM and air toxics emissions at the tailpipe are generally favorable compared 

to petroleum diesel fuel, but the impact on NOx is slightly detrimental. However, that work was 

done on engines without NOx or PM aftertreatment, so the important impacts on new engines is 

less well understood. Of greater importance, the RFS2 RIA also indicates that certain of the 

upstream emissions (PM, VOC, NOx, CO, and SO2) of biodiesel production (emissions 

associated with the upstream production and distribution of biodiesel) are detrimental to air 

quality. Upstream air toxics emissions impacts are negligible to slightly detrimental to air 

quality. Taking both tailpipe and upstream emissions associated with BBD production into 

account, the net impacts yield increases in the pollutants that contribute to both ambient 

concentrations of ozone and particulate matter as well as air toxics. This BBD analysis indicates 

that some emissions increases or decreases might be associated with any change in the required 

volume of BBD and the allowance under the advanced standard for other advanced biofuels. As 

we stated above, the overall impacts of marginal shifts between BBD and other advanced 

biofuels is expected to be small. Therefore, we do not believe that air quality impacts either by 

itself, or in consideration with other factors, warrants setting the BBD applicable volumes at 

levels higher or lower than 1.90 billion gallons in 2016, and 2.0 billion gallons in 2017.

b. Climate Change 

 4 A complete discussion of the RFS2 air quality analysis and its limitations can be found in Chapter 3 of the RFS2 

Regulatory Impact Analysis (RIA). U.S. EPA 2010, Renewable Fuel Standard Program (RFS2) Regulatory Impact 

Analysis. EPA-420-R-10-006. February 2010. Docket EPA-HQ-OAR-2009-0472-11332. 
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Pathways for advanced biofuels approved by EPA, including BBD produced from virgin 

vegetable oils such as soy, meet the definitional requirement that advanced biofuels provide at 

least a 50% improvement in GHG performance compared to 2005 baseline petroleum fuels. We 

believe the trend to increasing the use of waste fats, oils, and greases as feedstocks for the 

production of BBD has likely been driven by the lower cost of these feedstocks compared to 

virgin vegetable oils such as soy oil. Since BBD produced from waste fats, oils, and greases 

receives the same RFS compliance credit as BBD produced form virgin vegetable oils, the 

growth in use of waste fats, oils, and greases has been indicative of their cost advantage as a 

feedstock. The cheaper waste fats, oils, and greases will tend to be used preferentially toward 

meeting the BBD and advanced biofuel standards prior to the use of virgin vegetable oils such as 

soy oil. Similarly, the volume of non-food grade corn oil extracted from distillers grains and 

solubles produced during corn ethanol production has grown as a source for BBD feedstock, 

again reflecting its lower cost compared to virgin vegetable oils like soy oil. 

The available supplies of waste fats, oils, and greases feedstock and non-food grade corn 

oil feedstock are currently insufficient to produce even the minimum volume of 1.28 billion 

gallons required for BBD in 2013. While NBB and others noted that expanded feedstock 

availability for biodiesel production, in particular the expanding use of waste fats, oils and 

greases provides a greater opportunity for producing lower GHG BBD, we believe increases 

from these sources will slow and the majority of increases going forward will need to come from 

other qualifying sources. For any volume above the 1.28 billion gallon adopted for 2013, it is 

appropriate, therefore, to consider the impact of producing BBD from soy oil, the feedstock that 

will most likely be used at the margin to increase production over levels that can be attained 

using waste materials and non-food grade corn oil. Our analysis of soy-derived biodiesel as part 

of the 2010 RFS rulemaking indicated that it provides a 57% reduction in lifecycle GHG 

emissions as compared to the 2005 petroleum baseline. Other non-cellulosic advanced biofuels 

which could compete with soy BBD within the advanced standard include: sugarcane ethanol 

(primarily from Brazil); ethanol from grain sorghum, non-cellulosic portions of food waste and 

cover crops; renewable diesel from food waste or cover crops, naphtha from camelina oil, food 

waste or cover crops; and CNG/LNG from non-cellulosic sources.5

 These alternative advanced 

biofuels range in GHG reduction performance, with the waste-derived fuels providing the 

greatest reduction due to lack of any land use impact while biofuels made from crops having 

GHG reductions that are roughly comparable to soy biodiesel (e.g., sugarcane ethanol which has 

a 61% GHG reduction compared to gasoline; sorghum ethanol with estimated emission 

reductions of just over 50%;). Since for the years in question sugarcane and sorghum ethanol, 

and naphtha from camelina oil are the most likely marginal replacements for soy biodiesel, as 

suggested by feedstock availability and fuel production capacity, we believe based on these 

lifecycle GHG reduction calculations that if we set a marginally lower or higher BBD nested 

volume requirement and assumed this made a difference in how much BBD is ultimately used, 

 5 EPA has also recently assessed the GHG impact of producing and transporting biomass sorghum, pennycress oil, 

carinata oil, cottonseed oil, and jatropha oil as feedstocks with the potential for providing biofuels qualifying as 

advanced biofuels but to date none of these feedstocks has reached biofuel production stage.
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that there would be no significant GHG impact. Therefore, this factor does not appear to provide 

a good reason for setting a higher or lower nested BBD volume requirement for 2016 or 2017. 

We note, however, that certain advanced biofuels (e.g. ethanol from food waste or 

CNG/LNG from non-cellulosic feedstock) have significantly superior lifecycle GHG 

performance than soy biodiesel. Setting the nested BBD volume requirement sufficiently below 

the advanced biofuel requirement, as reflected in the final volumes, should provide a continuing 

incentive for the further development and marketing of such fuels, and may result in potentially 

increased GHG reductions through RFS implementation over the long term. 

While we received comments on the proposal from stakeholders indicating that they 

believed our GHG assessments of particular biofuels were inaccurate, with either a better or 

worse GHG impact more likely, reassessing the GHG impact of any particular pathway including 

those qualifying as BBD pathways is beyond the scope of this rulemaking, 

c. Wetlands, Ecosystems, and Wildlife Habitats 

As in the rulemaking establishing the BBD volume requirement for 2013, EPA has 

completed a largely qualitative assessment of impacts on wetlands, ecosystems, and wildlife 

habitats, consistent with available information. 

The comparison of impacts on wetlands, ecosystems, and wildlife habitats will depend on 

which alternative advanced biofuel would be displaced by BBD from virgin oils such as soy oil. 

As noted above, soy oil is the most likely feedstock for biodiesel production after the less

expensive waste fats, oils, greases, and non-food grade corn oil, and thus is the likely feedstock 

for producing marginal increases in BBD. Other non-cellulosic advanced biofuels which could 

compete with BBD within the advanced standard include: sugarcane ethanol (primarily from 

Brazil); ethanol from grain sorghum, non-cellulosic portions of food waste and cover crops; 

renewable diesel from food waste or cover crops, naphtha from camelina oil, food waste or cover 

crops; renewable diesel co-processed with petroleum diesel fuel, and CNG/LNG from noncellulosic sources. As discussed above, the advanced biofuels that are most likely to be impacted 

by the level at which the BBD applicable volume is established are the crop-based advanced 

biofuels including grain sorghum ethanol and sugarcane ethanol, and naphtha from camelina oil. 

Such biofuels, like soy biodiesel, are made from planted crops and therefore are likely to have 

impacts on wetlands, ecosystems and wildlife habitats which are roughly comparable to, yet still

may differ from, those of soy-based BBD. Depending on which of these alternative advanced 

fuels might replace soy-based BBD, the impacts of devoting a larger or smaller portion of the 

advanced biofuel standard to BBD will vary somewhat but, particularly given the relatively small 

volumes at issue, we do not believe that this factor provides a good reason for setting a higher or 

lower nested volume requirement for BBD. 

We note, however, that certain advanced biofuels (e.g. ethanol from food waste, 

CNG/LNG from non-cellulosic feedstock, etc.) are not made directly from crops, and would 

therefore likely have significantly lower impacts on wetlands, ecosystems, and wildlife habitats 
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than soy biodiesel. Setting the nested BBD volume requirement sufficiently below the 

advanced biofuel requirement, as reflected in the final volumes, should provide a continuing 

incentive for the further development and marketing of such fuels; to the extent such fuels 

become increasingly significant players in the advanced biofuel market, there could be longterm reductions in impacts on wetlands, ecosystems, and wildlife habitats as compared to a 

scenario where the BBD volume requirement is set at a level that did not incentivize production 

of such fuels. 

In its comments, NBB noted the trend toward higher yields for soy (thus lower land use 

impact) and improved conservation practices, both of which should reduce any adverse impact of 

soy biodiesel on wetlands, ecosystems and wildlife habitats.

d. Water Quality and Water Supply 

As is the case when considering the impacts on wetlands, ecosystems, and wildlife 

habitats, the impact on water quality and water supply will depend on which alternative advanced 

biofuel is displaced by soy-based BBD. As discussed above, the advanced biofuels that are most 

likely to be impacted by the level at which the BBD applicable volume is established for the 

years in question include grain sorghum ethanol, sugarcane ethanol and naptha from camelina 

oil. Such biofuels, like soy biodiesel, are made from planted crops and therefore are likely to 

have impacts on water quality and water supply that are comparable to, yet still may differ from, 

those of soy-based BBD. Depending on which of these alternative advanced fuels might replace 

soy-based BBD, the impacts of devoting a larger or smaller portion of the advanced biofuel 

standard to BBD will vary somewhat but, particularly given the relatively small volumes at issue, 

we do not believe that this factor provides a good reason for setting a higher or lower nested 

volume requirement for BBD. 

Some advanced biofuels s (e.g., CNG/LNG from non-cellulosic feedstock or ethanol 

made from food waste) will have little or no impact on water quality and water supply. While 

production of such fuels is likely to be limited in the short term, setting the nested BBD volume 

requirement significantly below the advanced biofuel requirement, as reflected in the final 

volumes, should provide a continuing incentive for the further development and marketing of 

such fuels; to the extent such fuels become increasingly significant players in the advanced 

biofuel market, there could be long- term reductions in impacts on water quality and water 

supply as compared to a scenario where the BBD volume requirement is set at a level that did not 

incentivize production of such fuels. 

2. Impact on Energy Security 

The wider use of any advanced biofuels, including BBD and sugarcane or sorghum 

ethanol, diversify the U.S. liquid fuel mix and provide energy security benefits. This is true for 

both domestically produced and imported biofuels. Advanced biofuels, whether produced 

domestically or imported, will contribute, on the basis of energy displaced, to enhanced energy 
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security. We received a comment NBB suggesting that “increasing the biomass-based diesel 

requirement will “diversify the U.S. liquid fuel mix and provide energy security benefits” in 

allowing for greater advanced biofuel volumes.” EPA believes that given the nested nature of 

the RFS standards, the additional BBD volumes referred to will be necessary to comply with the 

advanced and total renewable fuel standards. Thus, the analysis of energy security impacts 

associated with increasing the BBD standard so that a larger portion of the advanced biofuel 

standard would be BBD is a comparison of the energy security impacts of BBD to other types of 

advanced biofuels, not a comparison to diesel fuel. Other advanced biofuels, excluding BBD, 

currently include sugarcane ethanol (primarily from Brazil), sorghum ethanol, ethanol from food 

waste, renewable diesel co-processed with petroleum diesel fuel, CNG/LNG from certain waste 

digesters, and renewable naphtha, etc. All of these fuels displace U.S. imports of petroleum and 

diversify the U.S. fuel supply. Also, all of the biofuels that displace petroleum are less likely to 

subject to periodic supply disruptions or “oil shocks.” Setting a BBD standard that required that 

all or virtually all of the advanced biofuel standard be made up of BBD would reduce diversity 

of fuel supply and therefore reduce energy security. Based on these considerations, the 

supplemental analysis does not appear to suggest a distinct energy security advantage associated 

with selecting a higher or lower BBD applicable volume for 2016 and 2017, providing that our 

approach continues to incentivize the production and use of non-BBD advanced biofuels.

3. The Expected Annual Rate of Future Commercial Production of Renewable Fuels, 

including Advanced Biofuels in each Category 

Sections II.E and II.F of the preamble to the final rule provide an assessment of the 

maximum reasonably achievable volumes of commercial production and import of total 

renewable fuels for 2016, including advanced biofuels and BBD. Section IV of the preamble 

provides information on cellulosic production. As stated in section II.F of the preamble, for the 

purposes of determining the reasonably attainable volume of advanced biofuels, we believe it is 

reasonable to assume that a somewhat lower level of sugarcane ethanol imports will occur than 

the historic average over the last ten years. Thus we estimate that about 200 million gallons of 

sugarcane ethanol will be available in 2016 for the purposes of determining the advanced biofuel 

volume requirement for 2016. However, actual imports of sugarcane ethanol could be higher or 

lower than this level as shown in the scenarios for how the market could respond in Section II.G.

With regard to advanced biodiesel and renewable diesel, as discussed in sections II. E.3, 

II.F, and III. B. of the preamble, past experience suggests that a high percentage of the supply of 

biodiesel and renewable diesel to the United States qualifies as advanced biofuel. In previous 

years biodiesel and renewable diesel produced in the United States has been almost exclusively 

advanced biofuel. It is likely that some advanced biodiesel will be imported in 2016, as 

discussed in Section II.E.3.iii of the preamble, however we believe that the volume of biodiesel 

imported from Argentina in 2016 is likely to be less than the several hundred million gallons 

suggested by some commenters (see Section II.E.3.iii of the preamble for more detail on 

biodiesel and renewable diesel imports). Imports of conventional (D6) biodiesel and renewable 

diesel, however, have also increased in recent years, and are likely to continue to contribute to 
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the supply of renewable fuel in the United States in 2016. By setting the advanced biofuel 

applicable volume at a level that reflects reasonably attainable volumes, we expect a high 

percentage of the 2.5 billion gallon projected total 2016 supply of biodiesel and renewable diesel 

to be advanced biofuel.Due to the nested nature of the standards, all cellulosic biofuel qualifies 

to help meet the advanced biofuel volume requirement. As described in Section II.E.4 of the 

preamble, we have also estimated that about 25 million gallons of advanced biofuel other than 

ethanol, biodiesel, and renewable diesel can be supplied in 2016. We estimate that the 

combination of all these sources results in a reasonably attainable volume of advanced biofuel 

for 2016 of 3.61 billion ethanol-equivalent gallons. As we note in the preamble in section II.F,

the volumes actually used to satisfy this requirement may be different than those listed in Table 

II.F-1 below.

There is both sufficient capacity and feedstocks to meet the 1.9 and 2.0 billion gallon 

volume requirements for 2016 and 2017 being finalized for BBD as discussed in sections II.E.3 

(i)-(iii) of the preamble to the final rule and the current total capacity of all registered biodiesel 

and renewable diesel production facilities in the United States currently exceeds 2.7 billion 

gallons. In addition to the domestic production capacity, there is also significant registered 

capacity overseas. With regard to sufficiency of feedstocks, we received a number of comments 

concerning the availability of feedstocks for BBD. Section II. E.3.(i) of the preamble and RTC 

section 3.2.1 reviews the various studies and data submitted regarding the availability of 

feedstocks to produce BBD as well as our response to the submitted data. Given the comments 

and available data received, we believe that sufficient feedstocks are available for the production 

of the volume requirements we are finalizing in this rule. 

In summary, the domestic BBD industry coupled with foreign production available for 

import to the U.S. already has sufficient production capacity to meet the full 1.90 billion gallons 

being adopted for 2016 and to meet the 2.1 billion gallons of advanced biodiesel and renewable 

diesel assumed in setting the 2016 advanced biofuel standard. As noted earlier, EPA continues 

to respond to industry requests, expanding the number of advanced renewable fuel pathways 

including those producing BBD. Based on comments received and further analysis, we believe 

that an increase in the BBD volume to 1.90 billion gallons in 2016, and 2.00 billion gallons in 

2017 strikes the appropriate balance between providing a market environment where other types 

of advanced biofuels are incentivized and providing support and a degree of certainty for the 

BBD industry and the RFS program that are associated with increasing the BBD volume 

requirement. This approach does not limit additional BBD production. 

4. Impact of Renewable Fuels on Infrastructure 

a. Deliverability of Materials, Goods, and Products Other than Renewable Fuels 

We do not anticipate any significant impacts on deliverability of materials other than 

renewable fuels that might result from devoting a larger or smaller portion of the advanced 

biofuel standard to BBD for years 2016-2017. The EPA evaluated in the RFS2 final rule the 
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impacts on the U.S. transportation network from the distribution of the total additional volume of 

biofuels that would be used to meet the 2022 RFS standards. Oakridge National Laboratory 

(ORNL) conducted an analysis of biofuel transportation activity from production plants to 

petroleum terminals by rail, barge, and tank truck to identify potential distribution constraints to 

help support the assessment in the RFS2 final rule.6 The ORNL analysis concluded that the 

increase in biofuel shipments due to the RFS2 standards would have a minimal impact on U.S. 

transportation infrastructure. The majority of biofuel transportation is projected to be 

accomplished by rail. It was estimated that biofuels transport would constitute only 0.4% of the 

total freight tonnage for all commodities transported by the rail system through 2022.7 While 

that analysis did not consider BBD volumes greater than 1.82 billion gallons and evaluated RFS 

volumes more broadly, given the small contribution of biofuel transport as a whole to total US 

freight tonnage, we believe that our decision in setting the BBD applicable volume will not have 

a significant impact in this area. In addition, to the extent there were concerns, marginally 

higher BBD volume impacts would likely be comparable to those associated with the use of 

other advanced biofuels that it might displace. As a result, we do not believe that this factor 

provides a basis for selecting any particular BBD applicable volume for 2016 and 2017 

b. Sufficiency of Infrastructure to Deliver and Use Renewable Fuels 

The rapid growth of biodiesel and renewable diesel use has been driven by the RFS 

program and tax subsidies. In section II.E of the preamble to the final rule, we concluded that 

the infrastructure was available to deliver and use 2.5 billion gallons of renewable and biodiesel 

in 2016. Therefore we do not expect sufficiency of infrastructure to deliver and use renewable 

fuels to be a constraint for the final, or for marginally higher or lower nested BBD applicable 

volume requirements, and we do not believe this factor provides a good reason for selecting 

higher or lower final BBD applicable volume for 2016 and 2017. 

5. Impact of the Use of Renewable Fuels on the Cost to Consumers of Transportation Fuel 

and on the Cost to Transport Goods 

In the preamble, we provide illustrative cost estimates for hypothetical examples in which 

either soybean oil biodiesel or sugarcane ethanol fills the entire change in the advanced biofuel 

mandates from 2014 through 2017. We estimate the difference in the price per energyequivalent gallon of soybean oil biodiesel or sugarcane ethanol on the one hand, and the 

petroleum-based fuel they would replace on the other. We then multiply this difference by the 

year-on-year change in the advanced biofuel volume requirement. More detail on this analysis 

can be found in the Memo to the Docket titled “Illustrative Costs Impact of the Final Annual 

RFS2 Standards, 2014-2017.” This memo, for example, estimates the cost of using soybean oil 

 6 “Analysis of Fuel Ethanol Transportation Activity and Potential Distribution Constraints”, Oakridge National 

Laboratory, March 9, 2009. To simplify the ORNL analysis, BBD volumes were assumed to originate at the same 

points of production and to be shipped to the same petroleum terminals as the ethanol projected to be used to meet 

the RFS standards. 

7 See sections 1.6.4 and 1.6.5 of the RFS2 RIA. 
13

biodiesel to replace petroleum diesel ranges from $480 million to $1,182 million in 2016, while 

the cost for sugarcane ethanol to replace gasoline to satisfy the year to year changes in the 

advanced biofuel volume mandate ranges from $656 to $1,493 million for 2016. In conjunction 

with the current higher per gallon RIN value for biodiesel, this suggests that biodiesel can have a 

competitive advantage relative to sugarcane ethanol under the advanced standard. These cost 

estimates however, are based on current market conditions, and it is likely that market conditions 

will vary over time. The market will determine which advanced biofuels are used to meet the 

portion of the advanced standard that is not dedicated to BBD. To the extent that cost 

considerations favor BBD, the cost benefit can be accomplished either through setting a higher 

BBD nested standard, or allowing the market to choose BBD over competing products in 

meeting the advanced and total RFS standards. Thus, this factor does not appear to clearly favor 

setting either a higher or lower BBD nested standard than the levels finalized. 

 Setting a higher BBD volume requirement would only be expected, under the 

assumptions associated with this supplementary assessment, to impact biodiesel volumes on the 

margin, protecting them from being outcompeted by other advanced biofuels. Thus, the extra 

BBD volume requirement would merely replace other advanced renewable fuels that could be 

used to meet the advanced biofuel standard. As noted in the preamble, leaving room within the 

advanced standard for non-BBD advanced biofuels can incentivize the development and 

production of non-BBD advanced biofuels which may eventually provide a cost benefit as 

compared to BBD and support the growth in their volumes needed for the longer term success of 

the RFS program. In addition, this approach may temper to some extent BBD prices, by 

providing competition between the marginal BBD production volumes and other types of 

advanced biofuels. Therefore we believe that this factor supports maintaining the BBD volume 

requirement at a level sufficiently lower than the advanced biofuel volume requirement to 

incentivize production of non-BBD advanced biofuels, consistent with today’s final rule. 

6. Impact of Renewable Fuels on Other Factors 

a. Job Creation and Rural Economic Development 

Executive Order 13563 directs federal agencies to consider regulatory impacts on job 

creation and employment. According to the Executive Order, “our regulatory system must 

protect public health, welfare, safety, and our environment while promoting economic growth, 

innovation, competitiveness, and job creation. It must be based on the best available science” 

(Executive Order 13563, 2011). Regulatory employment impacts are difficult to disentangle 

from other economic changes affecting employment decisions, over time and across regions and 

industries. Labor market responses to regulation are complex. They depend on labor demand 

and supply elasticities and possible labor market imperfections (e.g., wage stickiness, long-term 

unemployment, etc.). The unit of measurement (e.g., number of jobs, types of job hours worked, 

and earnings), may affect observability of that response. Net employment impacts are composed 

of a mix of potential declines and gains in different areas of the economy (e.g., the directly 

regulated sector, upstream and downstream sectors, etc.) over time. 
14

If the U.S. economy is at full employment, even a large-scale environmental regulation is 

unlikely to have a noticeable impact on aggregate net employment. Instead, labor would 

primarily be reallocated from one productive use to another and net national employment effects 

from environmental regulation would be small and transitory (e.g., as workers move from one 

job to another). If the economy is operating at less than full employment, economic theory does 

not clearly indicate the direction or magnitude of the net impact of environmental regulation on 

employment; it could cause either a short-run net increase or short-run net decrease 

(Schmalansee and Stavins, 2011). 

Several commenters to the proposal provided or referenced additional information or 

studies on the impact of the RFS program in general on job creation and rural economic 

development. This information was considered and is discussed in RTC section 7.7. For 

example, numerous commenters stated that greater biofuel mandates increase employment, raise 

farm incomes and spur rural development in the U.S. On the other hand, another commenter 

suggested that proposed BBD volume requirements would continue to divert large quantities of a 

finite, inelastic supply of animal fats to the biofuels market, thereby critically disadvantaging the 

domestic oleochemical industry. This commenter suggested that the U.S. oleochemical industry 

could likely switch to foreign-sourced palm oil, which could result in a loss of potentially 25,000 

U.S. jobs. EPA believes that higher renewable fuel 2014-2017 RVOs will result in increases in 

employment, income, and tax revenues to many rural communities throughout the U.S. While 

the comments on employment and rural economic development provide insights into the impacts 

of increasing volume requirements on the renewable fuels and related industries, they do not 

necessarily provide a complete picture of the impact of a change in the volume standards on the 

whole U.S. economy. The example of the oleochemcial industry shows that there could be 

employment and income losses outside of the biofuel and their related industries from the greater 

use of renewable fuels as a result of the RFS.

To the extent that the guaranteed volumes cause more BBD to be used to fulfill the 

advanced biofuel volume, there will be more employment and wage income earned producing 

BBD, but less employment and wage income in the production of other advanced biofuels that 

could be used to satisfy the advanced biofuel mandate. Given the small changes in job and wage 

income across the advanced biofuel sector that would likely result from marginal changes in 

BBD volume, we do not believe that this factor provides a compelling reason for setting a higher 

or lower nested standard for BBD. 

b. Price and Supply of Agricultural Commodities 

In Sec II.I. of the preamble, we provide illustrative cost estimates for a hypothetical 

scenario in which soybean oil BBD fills the entire year-to-year increase in the final advanced 

biofuel standard. As part of this scenario analysis, we estimate price impacts on soybean oil 

from the higher demand for soybean oil BBD. We similarly analyzed a cost impact assuming 

Brazillian sugarcane ethanol satisfied the entire increase in the advanced standard. More detail 

on this analysis can be found in the Memo to the Docket titled “Illustrative Costs Impact of the 

Final Annual RFS2 Standards, 2014-2017”. 
15

To the extent that the guaranteed volumes cause more BBD to be used to fulfill the 

advanced biofuel volume, there may be small increases in the price of soybeans and soybean oil, 

but this should then result in offsetting price and supply impacts on feedstocks used to make 

other advanced biofuels such as grain sorghum and sugarcane. NBB noted that the cost of 

soybean meal may go down as a result of increased price for soy oil due to biodiesel demand. 

While such commodity price impacts might be small, they could tend to directionally offset any 

increase in soy oil price. Overall, we do not believe that this factor provides a good reason for 

either raising or lowering the nested standard for BBD. 

c. Food Prices 

 As mentioned previously, in Sec II.I. of the preamble we estimate wholesale price 

impacts on soybean oil for a hypothetical example in which the entire change in the year-to year 

final advanced biofuel volume mandates is met with soybean oil BBD. More detail on this 

analysis can be found in the Memo to the Docket titled “Illustrative Costs Impact of the Final 

Annual RFS2 Standards, 2014-2017”. 

To the extent that the guaranteed volumes associated with a BBD standard would cause 

more BBD to be used to fulfill the advanced biofuel volume, there may be small increases in the 

price of soybeans, but this should then lead to offsetting price and supply impacts on crop 

feedstocks used to make other advanced biofuels such as grain sorghum and sugarcane. NBB 

also noted that expanded use of inedible corn oil and other waste fats, oils and greases would 

decrease any potential impact on food prices of greater BBD production and use. Given the 

offsetting impacts and given that feedstock price is only one component in determining food 

prices, we would not expect any significant impact on food prices to result from marginal 

changes in the BBD nested volume requirement; therefore we do not believe that this factor 

provides a good reason for either raising or lowering the nested standard for BBD.